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Power bills up 8.5pc - and that's the good news

Adam Morton

VICTORIANS will pay 8.5 per cent more for their electricity as a result of the carbon price - less than estimated by the federal government - according to research billed as the most thorough investigation of Australia's climate change laws.

A study by the University of Queensland found Victorians faced a significant increase in household power bills from July 1 but a smaller hike than the 8.9 per cent average across the five eastern states linked through the National Electricity Market.

The projections come from ''massive hour-by-hour, real-time supercomputer modelling'' simulating behaviour of power generators, traders and consumers in the past three years and factoring in the carbon price of $23 per tonne of emissions. It suggested the national impact will be less than the 10 per cent increase estimated by Treasury.

It also challenged the Victorian government's claim that the state would be hardest hit due to its reliance on brown coal, finding Queensland (10.4 per cent) faced a higher initial price hike.

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For an average Victorian household, the carbon price would be expected to boost the annual cost of electricity by about $125, or $2.40 a week. The federal government says two-thirds of households will be fully compensated and eight out of nine will get some help through income tax cuts and increased welfare payments.

New South Wales (8.7 per cent) and South Australia (8.6 per cent) are expected to face similar price rises to Victoria, while Tasmania - which runs predominantly on clean hydroelectricity - is expected to pay just 3.8 per cent more.

The modelling found Victoria faced a smaller rise than Queensland in part because its brown coal generators would absorb more of the carbon price than the black coal generators in northern states. Victorian power stations are expected to receive about 97 per cent of $5.5 billion compensation available to the energy sector.

John Foster, of the University of Queensland's Global Change Institute, said its carbon price modelling was the most thorough available.

But he said price rises due to the carbon price may ultimately be less than projected given the ''incredible slack in the system'' - opportunities to limit the impact of the price through improving energy efficiency.

''I think people will start economising a lot more when the price comes in,'' Professor Foster said. ''There are an awful lot of economists around that are arguing that the increased costs are just going to be passed on and nobody's going to do anything about it. That's inconceivable … you would expect behaviour to change.''

Energy Retailers Association of Australia chief executive Cameron O'Reilly said the impact of the carbon price was extraordinarily complex and almost impossible to model with a high degree of confidence.

But he said on average Victorians were likely to be affected less than people in other states because they use less electricity and more natural gas, which has lower greenhouse emissions.

''It's difficult to be precise, but clearly, as this study indicates, there will be regional differences,'' Mr O'Reilly said.

The introduction of the carbon price follows a 40 per cent increase in electricity prices over the past five years.

amorton@theage.com.au

12 comments

So given that some of us already use 100% "Green" electricity - and pay a premium for it - that doesn't emit any Carbon Dioxide and is therefore not affected by this tax, then those of us who are also Victorians won't be paying a cent extra.

Commenter

DC

Location

Melbourne

Date and time

April 18, 2012, 8:36AM

$2.40 a week, probably covered by compensation or tax cuts? I await the inevitable "oh noes, the sky is falling, the end is nigh, won't someone please think of the children" responses. In the meantime, though, it's worth noting that you could save $2.40 a week by turning off a few lights and not holding the fridge door open for too long when you're getting yourself a beer. Which is sort of the point (reducing CO2 emissions from power consumption, that is).

Or you could just skip about one cup of coffee (or hot chocolate, or beer etc) per week. Your call.

Commenter

Fred

Date and time

April 18, 2012, 8:36AM

Again the government heaves out the sagging breasts of welfare to control those who latch onto its nipples.....

Commenter

existing

Date and time

April 18, 2012, 8:48AM

My supplier implemented the carbon tax costs on 24/03, 3months before the carbon tax comes into effect. Their price increases are as follows;- Daily Service charge 24.55%, Peak Usage 25.51%, Peak other times 4.60%. I consume more electricity at the peak rate so these costs cannot be averaged out. I support the carbon tax even though I am one of the few who will not get compensation, but I am concerned that suppliers will exploit this and then blame the government.

Commenter

disagree

Location

cockatoo

Date and time

April 18, 2012, 8:50AM

I already don't turn my heater on until I absolutely have to. I am a single person who rents, so I have to go with the heating already there. I earn good money (around 70K pa) and according to the govt website i will lose under the carbon tax.I really am very worried about how the price of electricity will affect my heating and cooking costs over winter. I really can't afford a bigger bill and if it is going up 9% that will add another $60 - $70 (based on last winter) to the bill.I pity those who are not earning as much as me and are single with no benefits or subsidies etc.I am a Labor/Greens voter, but can't understand why we need this new tax. Still not enough to make me vote for Abbott though.

Commenter

Bob

Location

Melb

Date and time

April 18, 2012, 8:53AM

Victorians all let us rejoice!!! For the price of electricity is going up by only 8.5%, i.e. .4% less than expected, and that is on actual electricty used. We have yet to hear about the increases for the "services" charges which for the most people, especially the poorer members of society, make up the bulk of the electricty bill.

By how much this increase to living costs is going to reduce the human contribution to global warming and/or climate change is yet to be revealed, especially when one significant volcanic incident will contribute well over the total global warming/climate change gasses than all the world's humanity will produce in a year. The Pinatubo effect anyone? (Interesting case that Pinatubo effect: all those gasses REDUCED the world's temperature not increase it!)

Commenter

The Beak

Date and time

April 18, 2012, 9:05AM

So now that "we" are paying through the nose for Smart Meters, are we going to be fully exposed to power prices during a heatwave? I do know that the ceiling price on electricity at these times can go up from 20 cents to $12.50 per kilowatt-hour, so it can cost $25 per hour to run a typical air-conditioner! The system sucks and we need fundamental energy market reform.

It is already a realistic economic choice for any single-person household with a radical energy-conserving agenda to GO OFF-GRID and thumb you nose at the tawdry neoliberal casino that this energy market has become. Energy retailers are free under deregulation to develop off-grid plugin systems for any houshold with a sun-exposed roof. That not a single electricity retailer in Australia offers such schemes is a clear indication of market failure, failing to cater for householders who profess a deep concern for environmental issues.

My DIY off-grid system which is right now powering my laptop has been running for a full year, and I relish explaining to incredulous energy salespersons that my lights, computer and fridge are fully independent of their crazy marketing overtures.

Commenter

Michael G

Location

North Melbourne

Date and time

April 18, 2012, 9:22AM

The aim of this government is to make all suffer in silence.

If you dare denounce this farcical tax as achieving nothing whatsoever for climate change then the leftist press brands you an ignorant climate change denier.

For some reason we all have to pay for this 'enviro-saving' measure and at the same time we all have to pay general motors to make unhealthy v8 and v6 cars here. The general 'requires' 7K of taxpayer money for each of those guzzlers and what, that is somehow green?

This is why I truly loathe the biased reporting that the abc offers up and why this country will be a much better place once the abc is gone.

Commenter

Alex

Location

Finley

Date and time

April 18, 2012, 9:31AM

Professor Foster is correct. People will start changing their behaviour when power prices go up. That's introductory economics. Individual behaviour, though, is only a secondary target of the carbon price - the primary one is the behaviour of firms in the wholesale electricity market. So compensation for the brown coal generators is counter-productive. Frankly, these people should be prosecuted, not compensated.

The compensation for individuals through tax cuts, pension increases, etc is a blunt instrument. It will overcompensate some and undercompensate others, on the basis of power consumption in individual households. Centrelink payments have been overcompensated to cope with this factor, but wage and salary earners haven't.

The real problem with a carbon price is precisely its virtue in the eyes of economists. It preserves the existing distribution of income and wealth. Eventually the compensation from tax cuts and pension rises will become unfunded, because the funding comes from the sale of pollution permits, but there will be no income once we reach the zero carbon economy we're aiming for.

We need an emergency transition to a 100% renewable energy system, funded by taking the money from the rich. Not even the Greens will go this far, because they are committed to capitalism. To save the planet, we need to abolish capitalism, not just in Australia, but worldwide.

Commenter

Greg Platt

Location

Brunswick

Date and time

April 18, 2012, 9:32AM

"According to research..." when news articles contain these words I get suspicious - sniff the air. Much of the "research" conducted today (regardless of the research body) is often tainted, commissioned by vested interest groups to obtain favorable outcomes to benefit that particular industry or sector - beware research.